Nationwide has started a high-profile ad campaign against Halifax and other providers which levy higher lending charges.
It slams Halifax, saying it is hitting first-time buyers with a £1,930 up-front charge if the buyer has only a small deposit. Nationwide charges nothing.
Brokers are backing the campaign, condemning the charge which pays for mortgage indemnity insurance to protect lenders against more risky high loan to value borrowers.
Halifax defends the fee, insisting that the majority of FTBs will not pay it as the typical FTB deposit last year was 19 per cent of the property value.
The ad is the latest attack by Nationwide on its competitors following its “brand new customers only” campaign last year.
Chief executive Philip Williamson says: “We have to remind people that we do not make that charge as it is a bit of a false charge. The risk of the loan should be built into the price. Why slip another premium on that? It is unnecessary and an excuse for more profit.”
Chase de Vere Mortgage Management director Nick Gardner says: “Nationwide is right and it is a clever move and it is good that attention is being drawn to this as it is a significant cost. I like the fact that it is putting figures on the charges.”
Halifax spokeswoman Carol Wright says: “The charge is only for high loan to value lending. The majority of first-time buyers do not pay it.”